1. Field of Invention
The present invention relates generally to tools which may be used in payment decisions. More particularly, the present invention relates to software applications which incorporate measures of competency and market data for use in payment decisions.
2. Description of the Related Art
In many organizations, the compensation of employees of the organization is assessed periodically in an effort to account for general employee performance, changes in the cost of living, and the seniority of the employees. Compensation systems are typically based on xe2x80x9csalary grades,xe2x80x9d or predetermined pay ranges. Such compensation systems are often xe2x80x9cseniority-based,xe2x80x9d as they are arranged primarily to reward individuals based upon their relative seniority in a position. In other words, a senior individual with a given job position will generally have a higher pay range and, hence, pay level, than a junior individual in the same type of job position. As a result, the competency of each individual in the job position may not be accounted for when pay level adjustments are to be made.
When competencies are to be considered in a determination of how the pay level of an individual is to be adjusted, the overall competency of the individual may be evaluated during an evaluation process such as a performance review. Once the competencies of the individual are evaluated, e.g., evaluated by the supervisor or the manager of the individual, the competencies are considered in light of an appropriate pay range. By way of example, an individual whose overall competencies are considered to be high may be assigned to a pay level in the upper half of the pay range associated with his seniority level.
FIG. 1 is a process flow diagram which illustrates one process of adjusting a pay level using measured competencies. The process 100 begins at step 102 in which competencies are measured through an evaluation process. The evaluation process generally includes a quantification of the performance of an individual in terms of the competency of the individual in his position. By way of example, for some positions, the competency of an individual may be evaluated based upon the technical proficiency of the individual, while for other positions, the competency may be evaluated based upon the communications skills of the individual. Typically, competencies are measured in terms of an evaluation of whether an individual is considered to be of xe2x80x9chigh competence,xe2x80x9d xe2x80x9caverage competence,xe2x80x9d or xe2x80x9clow competence.xe2x80x9d
After the competencies are measured, a performance evaluation is obtained in step 106 using the competencies. In general, the performance evaluation is an overall summary of the measured competencies. For example, the performance evaluation of an individual with a majority of competencies in the xe2x80x9caverage competencyxe2x80x9d category may result in a xe2x80x9cmeets objectivesxe2x80x9d rating, while the performance evaluation of an individual with a majority of competencies in the xe2x80x9chigh competencexe2x80x9d category may result in an xe2x80x9cexceeds objectivesxe2x80x9d rating.
Once the performance evaluation is obtained, the performance evaluation is compared in step 110 to a pay range that is specific to the position, e.g., job, held by the individual. As will be appreciated by those skilled in the art, a pay range for a position typically serves as a guideline for what to pay individuals in the position, and includes a lower end and an upper end. Pay ranges for positions are often determined through market studies, and published for use by employers. A comparison of the performance evaluation of an individual against an appropriate pay range allows an evaluation to be made regarding what pay the individual should receive.
In step 114, a determination of a pay action is made. That is, comparing the performance evaluation with the pay range allows a determination to be made regarding how the pay of the individual is to be adjusted. By way of example, if the individual has a high performance evaluation, the pay of the individual may be adjusted towards the upper end of the pay range. Alternatively, if the individual has a relatively low performance evaluation, the pay of the individual may be adjusted towards the lower end of the pay range. Once a pay action is determined, the process of adjusting a pay level is completed.
The adjustment of pay levels based on measures of competencies is generally subjective, since any correlation between different pay ranges and the measures of competency is difficult to identify. As such, the value placed by the market on particular competencies associated with a position is generally unknown. Since particular competencies may be valued more than others in the market, determining an appropriate pay level for an individual, based on the market, may be difficult when the valuation of the competencies in the market is uncertain. Further, the market may also value specific levels of contribution, e.g., contributions to an organization or company. However, like the measures of competency, assessing the levels of contribution of an individual then determining the appropriate pay level for the individual based on the levels of contribution may be difficult since the value placed by the market on levels of contribution is typically unknown.
Therefore, what is desired is a method and an apparatus for readily incorporating measures of the competency and contribution of an individual into pay decisions. That is, what is needed it a method and an apparatus for integrating measures of competency, levels of contribution, and market data into decisions regarding suitable pay levels for individuals.
The present invention relates to integrating competency measures, levels of contribution, and market distribution data into compensation decisions. According to one aspect of the present invention, a computer-implemented method for automating compensation decisions includes obtaining indications of performance for a group of individuals in a common role. Relative rankings are produced for the group of individuals based at least in part upon an analysis of the indications of performance, and are compared to distribution data that is relevant to the common role. The comparison of the relative rankings to the distribution data is used to determine a suggested level of compensation for each individual in the group of individuals.
In one embodiment, obtaining indications of performance for the group of individuals includes obtaining quantifications of competency and contribution for each of the individuals. In such an embodiment, producing the relative rankings for the group of individuals may include processing the quantifications of competency and contribution for each of the individuals using a regression algorithm.
According to another aspect of the present invention, a method for incorporating a performance evaluation of a selected individual into a determination of a pay target for the selected individual, who is part of a group of individuals, includes obtaining a measure of competency for the selected individual that is determined during the performance evaluation, and reflects a level of competency of the selected individual. The measure of competency is processed, using a regression formula, to obtain an overall score, which is used to produce a relative ranking for the selected individual with respect to the group of individuals using the overall score. The pay target for the selected individual is then calculated using the ranking and the distribution data. In one embodiment, the method includes obtaining a measure of contribution for the selected individual that reflects a level of contribution by the selected individual, and processing the measure of contribution, in addition to the measure of competency, to obtain the overall score.
In another embodiment, computing the pay target for the selected individual includes computing a target market pay value for the selected individual using the ranking and the distribution data, and evaluating the target market pay value and available budget to determine the pay target. In such an embodiment, a revised target market pay value may be obtained, and evaluating the target market pay value and the available budget to determine the pay target includes evaluating the revised target market pay value.
These and other advantages of the present invention will be better understood upon reading the following detailed descriptions and studying the various figures of the drawings.